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Irish Times
22-07-2025
- Business
- Irish Times
Should VAT on hospitality be reduced? A cafe owner and an economist debate
Derek Bennett: I've run a cafe for more than 20 years - my business model is nearly broken There has been much recent speculation recently about the planned decrease in VAT for hospitality . The cost to the exchequer would be €545 million, assuming the reduction is applied only to food and not to accommodation . Many commentators have been asking where is the evidence that a decrease is needed. Firstly, I firmly believe the reduced rate should not apply to accommodation, as hotels use a dynamic pricing model which allows them to increase prices when they are busy. One argument against the reduction is that business systems could not cope with splitting accommodation from food to have two different rates, 9 per cent and 13.5 per cent. To me that is laughable: some hotels are already dealing with four rates: 0 per cent (for example, on takeaway coffee bags); 9 per cent; 13.5 per cent and 23 per cent (on alcohol and juices). Their powerful point of sale (POS) systems are well able to cope. READ MORE I own and have run a cafe in Dún Laoghaire for the past 21 years. My business model is nearly broken. To underline this point, my books show the increases we have had to deal with in 2024 and 2025. When customers say the costs of rent, rates and energy must be an issue, I explain they're not really the problem. My hourly employee costs annually are €220,000 for five to six staff on a day, including €25,000 of employers' Pay Related Social Insurance (PRSI). Materials costs are €125,000. VAT is €54,000. Rent is €33,000. Energy is €18,000. Rates are €6,000. Our sales prices are at the high end and we have over 1,000 customers each week, so it shouldn't be so onerous. By the end of 2025, material inflation will have increased by 10 per cent (an increase of €12,000 over two years); living wage by 20 per cent (€40,000 over two years); VAT by 50 per cent (€44,000 or €22,000 in each of the two years) and sick pay is up €4,000. All of this amounts to a total of €100,000. The last three items contributed €88,000 or 88 per cent of the increases, and were set by the Government. Now, while any increase in employee benefits is very laudable, there does need to be joined up thinking around whether this is sustainable, along with the other increases we face. Part of that thinking requires Government departments to work together to assess the implications. [ Does Ireland's hospitality sector really need a VAT cut? Opens in new window ] It appears that was not done, and as a consequence, the next planned increase in living wage is delayed, as is auto pension enrolment, which will add €5,000 annually. These delays have been welcomed in the industry. But there is an elephant in the room which no one involved in the process appears to have considered: Covid tax warehousing. My business made a loss during Covid. The only reason we survived Covid was the Government's support programme, including tax warehousing, which left me with a sum of €58,000 to pay over five years, starting in May 2024. That arrangement in the two years for which I have broken down figures will amount to €18,000, and will be €12,000 for each of the following three years. How are small, community-based hospitality businesses supposed to deal with that on top of the increases outlined above? So now I am paying an overall extra of €118,000 – which has been partly offset by a price increase to my customers of €18,000. Therefore, in the two years of 2024 and 2025, my final extra costs amount to €100,000. There are many small businesses across Ireland facing this situation. That, to me, is the justification for a return to a lower VAT rate on food. We need innovative thinking – for example, exploring the possibility of focusing the VAT reduction on small hospitality businesses with net sales of up to €750,000, thereby excluding hotels, international chains, and large businesses. The €545 million cost to the exchequer would significantly reduce and, according to a Freedom of Information (FOI) request I submitted, over 3,000 businesses would benefit. Derek Bennett is the owner of Harry's Cafe Bar in Dún Laoghaire, Co Dublin Barra Roantree: Cutting VAT would be expensive and economically illiterate The last few weeks have seen warnings about darkening skies on the economic horizon. We are told that deteriorating prospects and the possibility of a trade war instigated by the United States mean that the Government will deliver a ' much more cautious and restrained budget' this year than previously planned. Yet, an expensive and economically illiterate election pledge to reinstate a reduced 9 per cent rate of VAT on hospitality appears to remain on the table, recently elevated to a 'solemn commitment' by the Tánaiste Simon Harris. VAT is already levied on guest accommodation, catering and restaurant services at a reduced rate of 13.5 per cent rather than the standard rate of 23 per cent that applies to most goods and services. Figures from Revenue suggest this amounts to a tax relief of almost €2 billion per year and that lowering the rate to 9 per cent – as was temporarily the case from 2011 to 2019, and then again during the pandemic – would cost an extra €810 million per year. Excluding guest accommodation from the cut would slightly lower the cost (to less than €600 million), though it is not clear how feasible this would be. What rate would apply, for example, to a hotel package including dinner, bed and breakfast? The Irish Hotels Federation has renewed calls on the Government for a 'permanent restoration' of the 9 per cent VAT rate on the hospitality food services sector. Photograph: Getty Images Either cut would be expensive – costing more, for example, than lifting 55,000 children out of poverty; indexing tax credits and bands by forecast inflation; or extending the full-rate of Carer's Allowance to those currently receiving a partial payment or Domiciliary Care Allowance. The economic case for prioritising a VAT cut over these other commitments in the Programme for Government is exceptionally weak. This is reflected in the constantly shifting rationale provided by the sector for the cut: an evergreen response to whatever the issue of the day is. Previously it was to stimulate demand by reducing prices. However, both Irish and international evidence suggests that such cuts were pocketed by business owners with subsequent increases passed onto consumers in the form of higher restaurant and hotel prices. Now lobbyists for the sector claim a reduction in VAT is needed to preserve or increase profit margins, otherwise warning of 'another catastrophic year of shutdowns and job losses'. This is despite the fact the latest figures show there were 11 new companies incorporated for every liquidation in the sector, and that hospitality employment was 7 per cent higher in the first quarter of 2025 than a year earlier. Even if the sector wasn't booming, cutting VAT is a terrible way of supporting any businesses that may be struggling. That's because the largest share of the gains from a VAT cut go to businesses with the highest turnover: those selling at high volume and/or high prices. In other words, a VAT cut benefits owners of McDonald's and Michelin star restaurants more than a small cafe or restaurant. [ VAT rate cut for hospitality is back on the table - but will it be enough? Opens in new window ] If the Government and sector really believes that some smaller cafes and restaurants are struggling and deserve support, there are countless better ways to provide this. For example, the Government has previously paid a grant aimed at smaller hospitality businesses based on the size of their commercial rates bills, while long-delayed reforms to reduce litigation costs would help reduce insurance premiums. Given the availability of superior alternatives, competing priorities, and the worsening economic outlook, all that cutting VAT would achieve is to recklessly erode our already fragile tax base. Doing so would be the final nail in the coffin of this Government's claim to be responsible stewards of the public finances. Dr Barra Roantree is Assistant Professor in Economics and Programme Director of the MSc in Economic Policy at Trinity College Dublin
Forbes
11-07-2025
- Business
- Forbes
Why Adaptable POS Solutions Are Essential For Security And Compliance
Peter Kellis, Founder and CEO, TRAY. Businesses of all sizes face mounting challenges in maintaining security and adhering to shifting compliance regulations today. I recently wrote about Android-based point-of-sale (POS) systems, dispelling myths about their security and highlighting best practices for secure deployment and maintenance. Taking it a step further, let's discuss the broader challenges of cybersecurity and compliance, emphasizing the importance of adaptable systems, endpoint security, encryption, cloud security and regulatory navigation. Point-of-sale systems, once viewed as straightforward tools for processing transactions, now stand at the intersection of commerce, cybersecurity and regulatory scrutiny. For organizations, this convergence underscores the importance of deploying adaptable POS solutions that can keep pace with emerging threats and regulatory demands. A New Era Of Risk And Regulation The rise of digital commerce and integrated payment systems has brought unparalleled convenience and operational efficiency. However, it has also made POS systems prime targets for cybercriminals. The risks range from data breaches and ransomware attacks to malware specifically designed to exploit vulnerabilities in POS networks. Compounding these threats are dynamic compliance standards—such as PCI DSS, GDPR and CCPA—that require businesses to safeguard sensitive customer data while navigating jurisdiction-specific regulations. The complexity of these challenges is exacerbated by common misconceptions about security and compliance. One prevalent myth is that all POS systems offer a comparable level of protection out of the box. In reality, security capabilities vary widely, and a one-size-fits-all approach often leaves businesses exposed to unnecessary risks. The Case For Adaptability Adaptable POS solutions play a critical role in addressing these challenges. Flexibility in a POS system allows businesses to respond quickly to new threats and evolving regulatory requirements. Whether it's implementing tokenization to protect payment data, integrating new authentication methods or adhering to updated privacy laws, a modular and customizable POS architecture enables businesses to stay ahead of the curve. Adaptable systems also reduce the burden on IT teams by simplifying updates and configurations. For example, a system that supports remote updates ensures that security patches and compliance changes are applied uniformly across all locations, reducing the risk of human error and inconsistent policies. Key Security Considerations For Modern POS Systems POS security encompasses several layers, from endpoint protection and encrypted transactions to secure network configurations. Here are three key considerations: • Endpoint Security: POS terminals often operate as endpoints within a broader network, making them potential entry points for malware or unauthorized access. Regular software updates and robust authentication protocols are essential. • Data Encryption: Payment data must be encrypted both in transit and at rest to protect it from interception. Technologies like point-to-point encryption (P2PE) and tokenization can significantly reduce the risk of data breaches. • Cloud Security: Many modern POS systems rely on cloud-based infrastructures for data storage and processing. Evaluating the security practices of cloud providers, including data access controls and incident response capabilities, is critical. Building Resilience Through Partnership While technology is a crucial enabler of security and compliance, businesses cannot go it alone. Partnering with POS providers and technology vendors who prioritize security and regulatory adaptability is essential. These partnerships can provide access to expertise, tools and support to navigate a complex and ever-changing landscape. In addition to technical support, these partnerships often include training programs to educate staff on the latest security best practices. Employee awareness is a vital layer of defense against cyber threats, as human error remains one of the leading causes of data breaches. By investing in adaptable POS systems, businesses can protect their customers, safeguard their operations and maintain their competitive edge in an increasingly connected world. As cyber risks continue to grow, the ability to combine robust security features with adaptability will define the leaders in the modern commerce landscape. Specific to restaurants, the industry my company serves, these principles are especially critical. Restaurants process a high volume of sensitive customer payment data daily, making them attractive targets for cybercriminals. Adaptable POS systems allow restaurant operators to address industry-specific security challenges, such as multi-location compliance or integration with delivery platforms, while also ensuring data protection. By partnering with trusted providers and staying proactive about security and compliance, restaurants can build customer trust, avoid costly breaches and focus on delivering exceptional dining experiences in a competitive market. Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives. Do I qualify?
Yahoo
22-05-2025
- Business
- Yahoo
Lightspeed Commerce CEO talks earnings, US consumer, hospitality
Point-of-sale and e-commerce software developer Lightspeed Commerce (LSPD) saw revenue rise 18% in its fiscal 2025, amounting to $1.07 billion for the year. Lightspeed Commerce CEO Dax Dasilva comes on Market Domination Overtime to talk about his company's earnings print, full-year guidance for its fiscal 2026, and the states of the consumer and hospitality industry in North America and Europe. To watch more expert insights and analysis on the latest market action, check out more Market Domination Overtime here. Lightspeed commerce reporting at an 18% rise in full year revenue for 2025. Looking ahead, the company is expecting lower revenue growth for 2026 in the range of 10 to 12%. The point of sale system, software solutions provider saying its outlook is reflective of its view on the macroeconomic environment. Here at the closer look, we've got the CEO, Dax DaSilva. Dax, great to have you on here. Talk to me about what you are most concerned about in the quarters to come. I know you cite macro uncertainty for the guidance that disappointed investors today. But we're hearing other companies that I imagine utilize POS systems like Lightspeed, that they are not as concerned about the macro environment coming forward here. So which is it? Yeah, thanks. Thanks for, thanks for having me. So we did see some pressure, some macro pressure in, um, in Q4, which for us is the January to, to March quarter. Uh, I think it was mostly February and March where we saw softness in the macro. But we did see, um, we did see some stabilization in April, and no further deterioration in May. So I think that the change in the guide for us or the guide for fiscal 26 is really because we've revamped our strategy and we're focusing on outbound sales in two growth markets: North America retail, hospitality, building up our outbound sales teams. And that's going to take some time to ramp. We started hiring that in January and are halfway through the 150 reps that we're hiring to capture that growth opportunity. And so as, as we go into, you know, into fiscal 26, we'll start to see the results of those reps on the ground. And Dax, you always have interesting line of sight into the consumer and so I wanted to get more color and commentary from you on that. I mean, if you were to characterize the consumer Dax and you would compare what you're seeing now versus let's say six months ago, how would you characterize it? Yeah, I think that there is, we're hearing a lot from businesses in retail and hospitality in North America and Europe. And there is, there has been a different, different moments, you know, a lot of talk about changes in trade policy and it does create, it does shake consumer confidence. And so, as a software vendor that serves, you know, mid-market SMB retail and hospitality, we've been supplying, we've been pitching tools in terms of analytics and insights and tools for them to be able to order directly from brands or brands in different countries if they want to optimize their spend during such changes in trade policy, as well as tools for them to be able to borrow capital to be able to expand their business in times of economic uncertainty. And that's all to respond to changing consumer sentiment and allowing them to sort of weather a period where there is perceived instability. Like I said, we saw a lot of the impact of that in February and March, and that sort of sentiment seems to have stabilized in April. Talk to me too about the $556 million impairment charge. Again, I know you cite macroeconomic uncertainty, specifically for smaller retailers as part of that. Walk me through that number and how you got to that. Yeah, I think that number is triggered because there was a compression in our share price, and that's sort of an accounting trigger that has caused us to do a write-down for a goodwill impairment. But it's a non-cash charge, and it doesn't impact our ability to operate the company or really impact our ability to do our strategic pivot. What about restaurant spending, Dax? You know, economists often make a beeline for that because it is so discretionary. What do you see in there? Yeah, so we primarily operate in the European restaurant space. We have an incredible position there. If you want to open a restaurant chain or you have a restaurant chain that's pan-European, Lightspeed is the number one choice. Uh, and yeah, the discretionary spend, especially since we're a lot of Michelin star restaurants, high-end restaurants or resorts, we see consumer sentiment really affect discretionary spend. But like I said, we saw a lot of the softness in North America hospitality where we have a smaller base and primarily in the early months of the calendar year. But like I said, stabilized. Sorry to cut you off there, Dax. I just thought it was interesting to hear you talk about the shift that you're seeing in that higher income consumer outside of the U.S. Can you talk to me a little bit more about how you're seeing different income groups behave differently in terms of their expenditures? Yeah, I think that as you, as you have consumers that may have higher discretionary income, there's a little potentially less impact to their overall spending habits. And in the U.S., where we have a smaller base of restaurants, but potentially less of the Michelin star class restaurant that we have, you know, we see a bit more of an impact when there is a change in consumer confidence and sentiment. Dax, really appreciate your time today. Thank you so much for joining us. Thank you. 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